The Governor’s Office of Small Business Assistance met in partnership with the Texas Music Office on February 9th, 2021 to provide an update on the Shuttered Venue Operator’s (SVO) Grant. The webinar focused on information required for small businesses to get ready to apply for the new grant through the U.S. Small Business Administration.
The HillCo report below is a summary of remarks intended to give you an overview and highlight of the discussions on the various topics discussed. This report is not a verbatim transcript; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Opening Comments
Adriana Cruz, Executive Director of Economic Development and Tourism
- Goal of webinar is to provide information and connect entrepreneurs to resources to keep Texas as a top state for small businesses
Sen. John Cornyn, Author of “Save our Stages” Legislation
- Discusses the impact of COVID-19 on music venues and workers in vast the supply chain of live music
- Provides overview of the “Save our Stages” Legislation
- Makes SBA grants available to music venues and provides up to 6 months of support to keep businesses and independent venues afloat and preserve the industry
- Intention to benefit live music venues and other dependent services
- Cruz – You have a long record of supporting the music and entertainment industry. Why is it so important to you and what led you the lead the fight?
- Living in Austin it’s hard to ignore the impact of live music on our culture. There are so many impactful Texas stars, I know that the music industry counts for a large portion of our Texans. Not just the performers impacted- the crews, hospitality and service industry all affected.
- Cruz – It took some work to get this through congress. What did it take to get this passed?
- Nothing happens fast in DC, we passed 4 COVID relief bills and then things slowed down. Spent hours and hours advocating for music venues (first to close, last to reopen)
- Great partners helped to get it across congress. Took a long time to build that consensus
- Cruz – As we look to the future of this program, what are your hopes for it’s future? How can our small businesses help to advocate for the program?
- Regrets that they have not been able to pass liability concerns, venues fear being sued even if they’ve done everything right in reopening. Abbott addressed that in state legislature
- Monitoring the roll out and prepared to provide additional help if needed. Telling stories has been incredibly effective- asks them to continue sharing personal stories that he can amplify to make a more effective case in congress
Brendon Anthony, Director of Texas Music Office
- Echoes gratefulness for Cornyn’s relief work and copyright legislation
- Hundreds of thousands of Texans rely on music industry and if anything is not functioning correctly it affects so many
- Provides social media information for TMO updates (gov.texas.gov/music)
Panel Answers to FAQs
Tim Jeffcoat, Director of SBA in the Houston Area
Q: What is an “eligible entity”? What specifically disqualifies an entity?
- Emphasis is on shuttered venues, theatres, movies, museums, talent reps. FAQ document on SBA website with up-to-date info on eligibility
- Disqualifying factors:
- You are not in US or own venues in multiple countries,
- You opened after February 29th, 2020
- You received a PPP loan as of December 27th, 2020
- You are a publicly traded corporation or owned by one
- More than 10% of your income came from federal government (grants)
- You have more than 500 employees
Q: Which is better, SVOG, PPP or EIDL?
- EIDL maximum $150,000, funding based on how injured you have been. More flexible
- PPP emphasis on paychecks, up to $10 million for your first time. 50% or more must be spent on W-2 Paychecks. Narrow use, but some can be applied to rent and utilities
- SVOG not open yet and it is unknown when it will be available. Priority is 90% or greater revenue loss, next is 70% or greater revenue loss
Blayne Tucker, Attorney and Venue Operator
Q: What can a venue do today to get ready? What documentation do they need?
- Nothing written in stone but encourages all the following info to be ready:
- 2020 and 2019 Financials, by month (bank statements)
- 2019 tax returns
- DUNS number (to register for SAMS Account)
- Active SAMS account with CAGE code assignment
- Register grant account at grants.gov
- Provide Floor Plan
Q: Where can a venue owner got to get help?
- Texas Music Office or National Independent Venue Association
- NET and SBA some of the most valuable assets for gathering documentation and applying
Joe Harper, Executive Director of SBDC North Austin
Q: What is gross earned revenue?
- SBA defines it well, just the receipts of sale of goods and services; other receipts such as donations or sponsorships, etc. are not part of Gross revenue calculation
Q: What are the key priorities for a recipient in disbursing SVO grant funds? Can funds be used to refund tickets for cancelled events?
- Yes, funds can be used for refunds; Look at patterns within necessary and reasonable expenses to determine what is appropriate
Q&A
Q: Is the amount we can receive 45% for 9 months or a full year?
- Jeffcoat – if you were in operation on Feb 1, 2019, it will be a full year. After Feb 1 you will do every full month gross earned revenue averaged and multiplied by 6
- SBA YouTube video that walks through calculation
Q: Lots of requests to discuss Fixed seating- which venues is this important for?
- Jeffcoat – Specifically important for museums and cinemas to target perpetual businesses that may have been shuttered; not required for music venues right now many have moveable seating and should still be able to apply
- Tucker – Independent venue operators should not get caught up on the Fixed Seating language, really doesn’t apply to them
- Jeffcoat – To clear it up: There is No fixed seating requirement unless you are a motion picture venue or museum
Q: How long do you anticipate the application process will take?
- Harper – just the application process can take a few hours; must wait piece by piece, causing the process to drag out quite a bit, so recommends beginning as soon as possible
- Tucker – Getting CAGE code alone can take up to 10 days, starting the process earlier is huge. If you are in the first period, you don’t want to waste too much time with the application process.
- What is needed to show what our principal business activity is? I want to prove from my revenue I qualify. What kind of documentation do I need to prove eligibility to the SBA?
- Harper – we need to see all revenue stream documentation and then will determine which streams qualify and which don’t. Need to ensure business is around 70% mark
- Starts with financial preparation. Will combine several revenue streams if they meet the criteria and add up to the correct amount
- Harper – we need to see all revenue stream documentation and then will determine which streams qualify and which don’t. Need to ensure business is around 70% mark
- Can you clarify if it is mandatory to be a music venue? Will venues with other uses (multi-purpose venues) be considered?
- Jeffcoat – if you are clearly a music venue, museum, or cinema, the answer is possibly; comes back to the revenue stream, if 70% or greater is coming from performances/entertainment you may still qualify
- Must be selling tickets, performances must be available to public, 70% of revenue must come from these kinds of services
- Sports arenas could be covered if bulk of revenue comes from theatrical performances
- Live performing arts organizations are eligible, doesn’t have to be music
- Jeffcoat – if you are clearly a music venue, museum, or cinema, the answer is possibly; comes back to the revenue stream, if 70% or greater is coming from performances/entertainment you may still qualify
- What is the difference between the Save our Stages grant and the SVOG?
- Tucker – Save our Stages refers to the lobbying efforts and name we were pushing in the Senate; SVOG is the actual program administered by the SBA
- Essentially synonymous, for applicant purposes only need to worry about SVOG
- Let’s say we get the PPP funds but don’t spend them until we know whether we qualify for the grant. Once we know we will qualify, can we return the PPP funds and apply for the grant?
- Harper – usually if you qualify or apply for the PPP you won’t be eligible for SVOG; once you accept the funds you are offered there is no way to return them
- Jeffcoat – in the SBA guidance, we are specifically saying you must choose between PPP or SVOG; resources are available to help you decide which one is the best fit. Must not pursue both at the same time
- We have been closed since June- we closed the PPP first draw and currently have the IDL. We were planning to apply for another PPP, should we wait on the grant?
- Jeffcoat – there are a lot of factors consider but here are some ideas- second draw PPP is maximum of $2 million, SVOG is $10 million; depending on size you might want to wait for the larger sum, even though we don’t know when it will be available
- Also consider what you are paying: is it majority paychecks or other expenses?
- PPP is being consumed at a decent rate and expires March 1st, both important to consider
- Jeffcoat – there are a lot of factors consider but here are some ideas- second draw PPP is maximum of $2 million, SVOG is $10 million; depending on size you might want to wait for the larger sum, even though we don’t know when it will be available
- Is the FTE for the 50 or fewer employees for first priority grant based upon the average FTE for 2020 or our current FTE?
- Harper – it will be based on the average. Resources and examples on how to do this calculation are available
- If there is not enough grant money for all qualified applicants, how will money be allocated?
- Jeffcoat – No way to really know
- Tucker – Yes there is a limited amount of money, but the spirit behind this is to preserve independent music venues; it is a newly created program and if the intended businesses aren’t getting the support needed, it is possible to refund it
Closing Remarks
- Next webinar Wednesday the 17th, focused on new round of PPP funding